The driving forces behind China’s growth


  • We thank Yingqi Wei, Dylan Sutherland and the participants of the 20th CEA Annual Conference for comments and suggestions on a previous version of this article, as well as an anonymous referee. The authors gratefully acknowledge financial support from the Spanish Ministry of Science and Innovation, (project ECO2008-06057/ECON) and Generalitat Valenciana (BFPI06/442 and Prometeo/2009/068). The usual disclaimer applies.


The main objective of this article is to disentangle the determinants of the Chinese economic growth that occurred from 1965 to 2000. We have explored, first, the time series properties of the growth rates of gross domestic product and labour productivity with an extended battery of unit-root tests. Then, in a multivariate setting, we use the VAR model methodology to provide evidence that physical and human capital accumulation, R&D expenditure, openness and competitiveness are the main drivers of output, labour productivity and total factor productivity growth in the long run. Additionally, we also show that although China has not yet converged to its long-run equilibrium, it is in the process of catching up. These results are more consistent with some versions of the endogenous growth models than with Solow-type models of growth, since they support active strategies of economic policy to stimulate economic growth and catching up with more advanced economies.